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Thursday, January 23, 2014

Single insurance product for all needs can improve reach; says Vijayan

Single insurance product covering all basic insurance
needs, together with options for customisation, would help improving insurance
penetration in India than having multiple products for a basic cover, said
Insurance Regulatory and Development Authority (IRDA) Chairman TS Vijayan.

Inaugurating the 7th Global Insurance Summit organised by ASSOCHAM in
Hyderabad, Mr. Vijayan said, “Currently, a typical general insurance product
covers specific risks such as fire, health, accident and loss of belongings
under separate policies. This approach is very cumbersome and a major roadblock
in increasing insurance penetration."

“Specific circumstances of low-income groups like unstable income, migration
for work and others should be considered while designing insurance products to
best suit their needs," he added.

Furthermore, he said that cost effective ways of distributing insurance covers
would be key to success in increasing insurance coverage among low income
groups. Absence of proper mechanisms to create awareness and effectively
communicate about protection offered by an insurance product to a policyholder
has led to low persistency and low claim ratios in the micro-insurance
business.

“The policy servicing mechanisms, particularly for claims, adopted by insurers
would be critical in delivering necessary protection," he said, adding,
“The claim payment procedure should be simple and transparent to ensure timely
payment of all eligible claims."

On IRDA's latest initiatives in enhancing the use of technology, he said that
issuance of e-policies through insurance repositories would reduce policy
issuance costs significantly.